Financial Accounting Assignment Sample

Introduction

The goal of this project is to incorporate fundamental concepts and techniques of financial accounting that allow financial accountants to record and prepare simple final accounts. This project report consists of 4 assignments; each assignment covers various financial accounting topics. In Task 1 the sole proprietor's business transactions are reported by double entry bookkeeping and are formed depending on the account balancein the end in the trial balance. In Task 2; final accounts for Italian Wines Ltd. are prepared by applying correct standards, this task will demonstrate how the financial statements are changed according to available additional details, such as accruals, prepayments, bad debts, etc. In Task 3; the principle of bank reconciliations is explained; how to reconcile cash book with bank passbook, what changes are appropriate in order to reconcile both balances also discussed in the paper. Task 4; listed two forms of control account (debtors and creditors control account), also describes how to rectify differences between sales ledger balance and debtor's control account. Suspense account management is done at report closure where error rectification is achieved by moving journal entries.

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Task 1.1

Trial balance: It is a document prepared to identify anyÂ difference between debit and credit balance, where debit side enters all assets and expenses and credit side reports all liabilities and income (Sharma, 2019).

Â	Trial Balance as on 31st March, 2020
S. No.	Particulars	L.F.	Debit Amount	Credit Amount
1	Premises	Â	340000	Â
2	Van	Â	51250	Â
3	Fixtures	Â	8100	Â
4	Inventory	Â	63900	Â
5	P Mullen	Â	1400	Â
6	F Lane	Â	3100	Â
7	Cash at Bank	Â	62400	Â
8	Cash in hand	Â	5600	Â
9	S Hood	Â	Â	2150
10	J Brown	Â	Â	4600
11	Capital (Balancing Figure)	Â	Â	529000
Â	Â	Â	Â	Â
Â	Total	Â	535750	535750

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Task 1.2

The double-entry system of accounting says that the amount of each transaction in business should be reflected in at least two accounts. The framework of this bookkeeping method directs that the amount of debit and credit column should tally for every transaction (Sangster and Rossi, 2018).

Journal Entries
Date	Particulars	L.F.	Dr. Amount	Cr. Amount
April	Â	Â	Â	Â
1	Storage Cost a/c Dr.	Â	400	Â
Â	To Bank a/c	Â	Â	400
Â	(Being storage cost paid)	Â	Â	Â
Â	Â	Â	Â	Â
2	Purchase a/c Dr.	Â	5000	Â
Â	To S Hood a/c	Â	Â	1400
Â	To D Main a/c	Â	Â	2000
Â	To R Foot a/c	Â	Â	1600
Â	(Being good brought on credit)	Â	Â	Â
Â	Â	Â	Â	Â
3	T Cole a/c Dr.	Â	1650	Â
Â	F Syme a/c Dr.	Â	2000	Â
Â	J Allen a/c Dr.	Â	900	Â
Â	F Lane a/c Dr.	Â	750	Â
Â	To Sales a/c	Â	Â	5300
Â	(Being goods sold on credit)	Â	Â	Â
Â	Â	Â	Â	Â
4	Motor expenses a/c Dr.	Â	400	Â
Â	To cash a/c	Â	Â	400
Â	(Being motor expenses paid in cash)	Â	Â	Â
Â	Â	Â	Â	Â
7	Capital a/c Dr.	Â	1500	Â
Â	To cash a/c	Â	Â	1500
Â	(Being cash withdrawn by owner)	Â	Â	Â
Â	Â	Â	Â	Â
9	T Cole a/c Dr.	Â	650	Â
Â	J Allen a/c Dr.	Â	1300	Â
Â	To Sales a/c	Â	Â	1950
Â	(Being goods sold on credit)	Â	Â	Â
Â	Â	Â	Â	Â
14	Van a/c Dr.	Â	28500	Â
Â	To Abel Motors a/c	Â	Â	28500
Â	(Being Van purchased on credit)	Â	Â	Â
Â	Â	Â	Â	Â
16	Bank a/c Dr.	Â	6500	Â
Â	To P Mullen a/c	Â	Â	1400
Â	To F Lane a/c	Â	Â	3100
Â	To F Syme a/c	Â	Â	2000
Â	(Being cheques received from debtors)	Â	Â	Â
Â	Â	Â	Â	Â
22	Purchase a/c Dr.	Â	1800	Â
Â	To D Main a/c	Â	Â	1800
Â	(Being goods purchased on credit)	Â	Â	Â
Â	Â	Â	Â	Â
24	S Hood a/c Dr.	Â	2150	Â
Â	J Brown a/c Dr.	Â	4600	Â
Â	R Foot a/c Dr.	Â	1400	Â
Â	To Cash a/c	Â	Â	8150
Â	(Being payment made to creditors)	Â	Â	Â
Â	Â	Â	Â	Â
27	Salaries a/c Dr.	Â	4800	Â
Â	To Bank a/c	Â	Â	4800
Â	(Being Salaries paid)	Â	Â	Â
Â	Â	Â	Â	Â
30	Business expenses a/c Dr.	Â	1320	Â
Â	To Bank a/c	Â	Â	1320
Â	(Being business rates paid)	Â	Â	Â
Â	Â	Â	Â	Â
31	Abel Motors a/c Dr.	Â	28500	Â
Â	To Bank a/c	Â	Â	28500
Â	(Being payment made to Abel Motors)	Â	Â	Â
Â	Â	Â	Â	Â
Â	TOTAL	Â	94120	94120

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Ledger: A ledger is a secondary entry book that records transactions directly from journal entries after passing journal entries (Minnis and Sutherland, 2017). Each ledger account consists of opening and closing account, where the closing account number for further calculations is forwarded to the corresponding financial statement. Cash, receivable accounts, savings, inventory, accounts payable, unpaid expenses, and consumer deposits are examples of the ledger.

Cash a/c
Date	Particulars		Amount	Date	Particulars		Amount
April	Â		Â	April	Â		Â
1	To balance b/d		5600	4	To motor expenses a/c		400
Â	Â		Â	7	To Capital a/c		1500
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	30	By balance c//d		3700
Â	Â		Â	Â	Â		Â
Â	Â		5600	Â	Â		5600
Â	Â	Â	Â	Â	Â	Â	Â
Purchase a/c
Date	Particulars		Amount	Date	Particulars		Amount
April	Â		Â	April	Â		Â
2	To S Hood a/c		1400	Â	Â		Â
Â	To D Main a/c		2000	Â	Â		Â
Â	To R Foot a/c		1600	Â	Â		Â
22	To D Main a/c		1800	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	30	By balance c/d		6800
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		6800	Â	Â		6800
Â	Â	Â	Â	Â	Â	Â	Â
S Hood a/c
Date	Particulars		Amount	Date	Particulars		Amount
April	Â		Â	April	Â		Â
24	To bank a/c		2150	1	By balance b/d		2150
Â	Â		Â	2	By Purchase a/c		1400
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
30	To balance c/d		1400	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		3550	Â	Â		3550
Â	Â	Â	Â	Â	Â	Â	Â
D Main a/c
Date	Particulars		Amount	Date	Particulars		Amount
April	Â		Â	April	Â		Â
Â	Â		Â	2	By Purchase a/c		2000
Â	Â		Â	22	By Purchase a/c		1800
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
30	To balance c/d		3800	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		3800	Â	Â		3800
Â	Â	Â	Â	Â	Â	Â	Â
T Cole a/c
Date	Particulars		Amount	Date	Particulars		Amount
April	Â		Â	April	Â		Â
3	To Sales a/c		1650	Â	Â		Â
9	To Sales a/c		650	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	30	By balance c/d		2300
Â	Â		Â	Â	Â		Â
Â	Â		2300	Â	Â		2300
Â	Â	Â	Â	Â	Â	Â	Â
J Allen a/c
Date	Particulars		Amount	Date	Particulars		Amount
April	Â		Â	April	Â		Â
3	To Sales a/c		900	Â	Â		Â
9	To Sales a/c		1300	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	By balance c/d		2200
Â	Â		Â	Â	Â		Â
Â	Â		2200	Â	Â		2200
Â	Â	Â	Â	Â	Â	Â	Â
P Mullen
Date	Particulars		Amount	Date	Particulars		Amount
April	Â		Â	April	Â		Â
1	To balance b/d		1400	16	By bank a/c		1400
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		1400	Â	Â		1400
Â	Â	Â	Â	Â	Â	Â	Â
Abel Motors a/c
Date	Particulars		Amount	Date	Particulars		Amount
April	Â		Â	April	Â		Â
31	To bank a/c		28500	14	By Van a/c		28500
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		28500	Â	Â		28500

Bank a/c
Date	Particulars		Amount	Date	Particulars		Amount
April	Â		Â	April	Â		Â
1	To balance b/d		62400	1	By storage cost a/c		400
16	To P Mullen a/c		1400	24	By S Hood a/c		2150
Â	To F Lane a/c		3100	Â	By J Brown a/c		4600
Â	To F Syme a/c		2000	Â	By R Foot a/c		1400
Â	Â		Â	27	By Salaries a/c		4800
Â	Â		Â	30	By Business expenses a/c		1320
Â	Â		Â	30	By Abel Motors a/c		28500
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	By balance c//d		25730
Â	Â		Â	Â	Â		Â
Â	Â		68900	Â	Â		68900
Â	Â	Â	Â	Â	Â	Â	Â
Sales a/c
Date	Particulars		Amount	Date	Particulars		Amount
April	Â		Â	April	Â		Â
Â	Â		Â	3	By T Cole a/c		1650
Â	Â		Â	Â	By F Syme a/c		2000
Â	Â		Â	Â	By J Allen a/c		900
Â	Â		Â	Â	By F Lane a/c		750
Â	Â		Â	9	By T Cole a/c		650
Â	Â		Â	Â	By J Allen a/c		1300
Â	Â		Â	Â	Â		Â
30	To balance c/d		7250	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		7250	Â	Â		7250
Â	Â	Â	Â	Â	Â	Â	Â
R Foot a/c
Date	Particulars		Amount	Date	Particulars		Amount
April	Â		Â	April	Â		Â
24	To bank a/c		1400	2	By Purchase a/c		1600
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
30	To balance c/d		200	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		1600	Â	Â		1600
Â	Â	Â	Â	Â	Â	Â	Â
Â J Brown a/c
Date	Particulars		Amount	Date	Particulars		Amount
April	Â		Â	April	Â		Â
24	To bank a/c		4600	1	By balance b/d		4600
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		4600	Â	Â		4600
Â	Â	Â	Â	Â	Â	Â	Â
F Syme a/c
Date	Particulars		Amount	Date	Particulars		Amount
April	Â		Â	April	Â		Â
3	To Sales a/c		2000	16	By bank a/c		2000
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		2000	Â	Â		2000
Â	Â	Â	Â	Â	Â	Â	Â
F Lane a/c
Date	Particulars		Amount	Date	Particulars		Amount
April	Â		Â	April	Â		Â
1	To balance b/d		3100	16	By bank a/c		3100
3	To Sales a/c		750	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	By balance c/d		750
Â	Â		Â	Â	Â		Â
Â	Â		3850	Â	Â		3850
Â	Â	Â	Â	Â	Â	Â	Â
Van a/c
Date	Particulars		Amount	Date	Particulars		Amount
April	Â		Â	April	Â		Â
1	To balance b/d		51250	Â	Â		Â
14	To Abel Motors a/c		28500	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	By balance c/d		79750
Â	Â		Â	Â	Â		Â
Â	Â		79750	Â	Â		79750
Â	Â	Â	Â	Â	Â	Â	Â
Capital a/c
Date	Particulars		Amount	Date	Particulars		Amount
April	Â		Â	April	Â		Â
7	To cash a/c		1500	1	By balance b/d		529000
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	To balance c/d		527500	Â	Â		Â
Â	Â		Â	Â	Â		Â
Â	Â		529000	Â	Â		529000

Â II.

Trial Balance as on 30th April, 2020
Particulars	L.F.	Debit Amount	Credit Amount
Premises	Â	340000	Â
Van	Â	79750	Â
Fixtures	Â	8100	Â
Inventory	Â	63900	Â
Purchases	Â	6800	Â
Sales	Â	Â	7250
Cash at Bank	Â	25730	Â
Cash in hand	Â	3700	Â
Storage cost	Â	400	Â
Motor expenses	Â	400	Â
Salaries	Â	4800	Â
Business expenses	Â	1320	Â
S Hood	Â	Â	1400
R Foot	Â	Â	200
D Main	Â	Â	3800
T Cole	Â	2300	Â
J Allen	Â	2200	Â
F Lane	Â	750	Â
Capital	Â	Â	527500
Â	Â	Â	Â
Total	Â	540150	540150

Â III.

Analysis from the trial balances of 31^st March 2020 to 30^th April 2020:

The Van account has an increase of 28500 because of new purchases made (Berger, et al., 2017).
Sundry creditors have shown a decrease of 1350 due to payments made to creditors.
Sundry debtors have shown an increase of 750 due to credit sales made during the period.
Capital has decreased by 1500 because of cash withdrawals.
Cash balance decreased by 1900 and bank balance by 36670 due to purchases and expenses done in the month.
The total trial balance is 4400 pounds more, which shows the new expenses, incurred, purchases and sales done in the period.

Task 1.3

The balances of trial balance end up in financial statements that is, the profit & loss account for expenses and income and the balance sheet for the assets and liabilities (Murtala, et al., 2018).

Statement of Profit and Loss for the period ending 30th April, 2020
Particulars	Â	Amount
Sales	Â	7250
Less: Purchases	Â	6800
Gross Profit	Â	450
Less: Other expenses	Â	Â
Storage cost	400	Â
Motor expenses	400	Â
Salaries	4800	Â
Business expenses	1320	6920
Â	Â	Â
Â	Â	Â
Â	Â	Â
Net Profit or Loss		-6470

Balance Sheet as on 30 April, 2020
Equities and Liabilities	Â	Amount
Capital	527500	Â
Less: Net P&L	-6470	521030
Â	Â	Â
Creditors:	Â	Â
S Hood	1400	Â
R Foot	200	Â
D Main	3800	5400
Â	Â	Â
Â	Â	Â
Â	Â	Â
Â	Â	Â
Total Liabilities		526430
Â
Assets	Â	Amount
Premises	Â	340000
Van	Â	79750
Fixtures	Â	8100
Inventory	Â	63900
Debtors:	Â	Â
T Cole	2300	Â
J Allen	2200	Â
F Lane	750	5250
Cash at Bank	Â	25730
Cash in Hand	Â	3700
Â	Â	Â
Total Assets		526430

Task 2.1

Financial Statement of Accounting: Financial statements indicate point-in-time reporting and are compiled by executive accounting heads. A financial report statement is made up of different reports including; the balance sheet, profit accounts, owner's equity statement and cash flow statement (Murtala, et al., 2018). These claims are often considered for their ultimate value by outside stakeholders such as borrowers, lending companies, tax departments and investors.

Comparison of different financial statements:

Basis	Balance sheet	Income statement	Cash flow statements
Purpose	This statement depicts the position of finances of the business on a specified date.	It shows the profit earned during the period from the operations of the business.	It identifies the inflow and outflow of cash in the company for its accounting period.
Structure	It consists of two parts namely the Equity and Liabilities and the Assets.	It also has two types of transactions namely, the income and the expenses of the business (Berger, et al., 2017).	It shows cash flows from three categories namely, operating, financing and investing activities.
Content	Assets consist of long-term assets and short-term assets whereas the Equities and Liabilities part contains information about capital balance, and long-term and short-term liabilities (Liang, etal., 2016)	The income side contains the income from operating and other activities and the expense side shows the operating and other expenses incurred in the company for its financial year.	It shows only the activities that have taken place in cash and ignores all non-cash items. The operating cash flow shows inflow or outflow from operating activities. The investing and financing cash flows show the increase or decrease in cash flows from investments and financing activities respectively.

Task 2.2

Profit and loss a/c for the year ended 31^stMarch, 2020
Â	Â	Â	Â
Particulars	L/f	Debit (Â£)	Credit (Â£)
Sales revenue	Â	Â	198000
Opening Inventory	Â	12000	Â
Purchases	Â	102000	Â
Closing Inventory	Â	Â	14000
Gross profit	Â	Â	98000
Salaries and wages	Â	5500	Â
Add: Accrued salary	Â	2000	Â
Administrative expenses	Â	24500	Â
Distribution expenses	Â	14000	Â
Dividends paid	Â	1000	Â
Depreciation:	Â	Â	Â
Property 2%	Â	6000	Â
Motor Vehicles 10%	Â	1000	Â
Net profit before interest and taxes	Â	Â	44000
Less: Tax	Â	9000	Â
Net profit before interest and after tax	Â	Â	35000
Less: Interest@10%	Â	1500	Â
Net profit after interest and tax	Â	Â	33500

Task 2.3

Financial position of Italian Wines as on 31^st March 2020:

Financial position as on 31^stMarch 2020
Â	Â	Â
EQUITY AND LIABILITIES	Â£	Â£
Equity:	Â	Â
Issued Share capital	100000	Â
Revaluation Reserves	50000	Â
Share Premium	50000	Â
Retained earnings	112000	312000
Non-current Liabilities:	Â	Â
10% Redeemable loan	Â	15000
Current Liabilities:	Â	Â
Accrued salary	2000	Â
Trade payables	21000	Â
Tax liability	9000	Â
Accrued Interest@10%	1500	33500
Total Equity and liabilities	Â	360500
Â	Â	Â
ASSETS	Â£	Â£
Non-Current Assets:	Â	Â
Property	300000	Â
Less: Depreciation	9000	291000
Motor Vehicles	10800	Â
Less: Depreciation	1800	9000
Â	Â	300000
Current Assets:	Â	Â
Trade receivables	24000	Â
Bank and Cash	22500	Â
Inventory	14000	60500
Total Assets	Â	360500

Â Task 2.4

a)	Â	Â	Â
Â	Return on capital employed	Â£	Â£
A	Earning before Interest and Tax (EBIT)	Â	44000
Â	Total Assets	360500	Â
Â	Less: Current Liabilities	33500	Â
B	Capital Employed	Â	327000
Â	ROCE (A/B) Ã— 100	Â	13%
Â	Â	Â	Â
b)	Â	Â	Â
Â	Gross Profit Margin	Â£	Â
A	Gross Profit	98000	Â
B	Net Sales	198000	Â
Â	Gross Profit Margin (A/B) Ã— 100	49%	Â
Â	Â	Â	Â
c)	Â	Â	Â
Â	Net Profit Margin	Â£	Â
A	Net profit after interest and tax	33500	Â
B	Net sales	198000	Â
Â	Net Profit margin(A/B) Ã— 100	17%	Â
Â	Â	Â	Â
d)	Â	Â	Â
Â	Debtors Turnover Ratio	Â£	Â
A	Net Credit Sales	198000	Â
B	Average accounts receivable:	24000	Â
Â	Debtors Turnover Ratio (A/B)	8.25	Â
Â	Â	Â	Â
e)	Â	Â	Â